"Many believe that one clear sign that the US economy is on the
road to recovery is the healthy rebound in the US monetary
aggregates and bank lending – something Europe and Japan can only
dream of," he writes.

Since the financial crisis, bank lending has rebounded sharply.

But Edwards is not thrilled.

Taking a closer look at the numbers, Edwards notes that much of
the lending has been going back toward leveraging up corporate
balance sheets, as companies effectively swap out their equity
for debt.

We look at the recovery in the credit aggregates and find all
that is happening is that US corporates are once again engaging
in their bad old destructive practices. For despite all
the talk of cash rich US corporates, that has not stopped them
returning to the credit markets to leverage up their balance
sheets even more  spending the proceeds, almost dollar for
dollar on equity buybacks (see chart below). History suggests
this always ends badly. Maybe this time will be different, but I
fear otherwise.

Here's the chart showing the evolving corporate balance sheet:

Societe Generale

Pointing to the work of colleague Andrew Lapthorne, Edwards
reminds us that companies are among the worst market timers:

Andrew shows just how awful the timing of companies buying in
their own equity has been historically (see chart below). Often
the corporate sector ends up as the only major buyer of stock
near the peak of the market and then switches to issuing as the
market crashes. This inevitably has exacerbated the equity boom
and bust in recent years.

Check out this unfortunate correlation:

Societe Generale

Albert Edwards thinks that we're basically repeating the
financial crisis that we've just begun to come back from.

"But can this time around be different?" he asks. "I
seriously doubt it. When the next leg in the structural bear
market occurs, expect the equity buybacks to end, contributing
to a renewed steep downturn in bank borrowing and monetary
aggregates. The recent surge in the money data should be seen as
a sign of the ills in the US economy, not health!